The Economic Outlook for the U.S. and Montana

1. The Economic Outlook for the U.S. and Montana Patrick M. Barkey, DirectorBureau of Business and Economic ResearchUniversity of Montana

2. The U.S. Economic Expansion: NineTen Years and Counting     U.S. growth surge is a global outlier Taxes and spending: higher growth, bigger deficits Inflation nowhere in sight Trade and housing are laggards, consumer and business spending carrying the load The services economy is in charge, manufacturing growth is stalling Interest rates on the way updown

3. There Was an Acceleration in U.S. Growth Last YearReal Gross Domestic Product (GDP) Growth, Percent, Actual and Forecast Forecast 2016 2017 2018 2020 2019 Source: U.S. Bureau of Economic Analysis and IHS Markit

4. Percent Advanced Economies Expected to Decelerate as Global Growth Levels Off Advanced Economies Percent Change in Real Gross Domestic Product, Actual and ForecastSource: International Monetary Fund

5. Global Growth Has Been Good, But Challenges EmergeNumber of Advanced Economies in Recession, by Year, 1991-2016 107 Recessions 19 Predicted Recessions Source: International Monetary Fund

7. Mixed Story for Most Important CommoditiesSelect Commodity PricesJune 2019 vs. 5-Year High and Low Materials & Foodstuffs (as of June 2019) Metals & Energy (as of June 2019) 1530.71 2.87 6.49 1.60 102.99 High High 0.69 30.34 Low 3.34 1.81 502.52 Low 1.59 2.72 2.03 3.23 297 564 2.67 370.69 [Current] 359 current Framing Lumber Copper ($ per Thousand BF) ($ per pound) 1443.85 4.62 2.73 Barley Palladium ($ per bushel) ($ per troy oz.) 1.18 2.03 Beef Zinc ($ per pound) ($ per Pound) 4.75 54.67 4.89 Wheat, SRW Oil ($ per Barrel) ($ per bushel) Source: International Monetary Fund Source: World Bank, USDA, Random Lengths

8. Is Montana Invited to the National Economic Party? Growth since 2016 has continued Labor market continues to tighten State revenue growth has been good Global economic environment has worsened Dark clouds looming for Powder River basin coal Recovery for Montana’s agriculture and energy producers has not been smooth Tech is an under-reported good news story

9. State Economic Earnings Slowed in 2018Percent Growth, Inflation-Corrected Nonfarm Earnings, Montana Percent Source: U.S. Bureau of Economic Analysis

10. Recent Growth is Broad BasedChange in Inflation-Corrected Wages by Industry, Montana, Through 2019Q1 $Millions Source: Quarterly Census of Employment and Wages

11. Billings and Non-Urban Counties Performing BetterChange in Inflation-Corrected Wages by County, Montana, Through 2019Q1 $ Millions Source: U.S. Quarterly Census of Employment and Wages

20. Montana Labor Market Still TighteningUnemployment Insurance Claims, 2017-19 2017 2019 2018 Source: Montana Department of Labor and Industry

21. Growth in Population of Prime Age Workers Has StagnatedMontana Population by Age-Category, Selected Years Source: UM Bureau of Business and Economic Research

22. Montana Growth is Low by Western StandardsPercent Growth in Real Nonfarm Earnings, 2017 5.6% 2.7% -0.9% 4.7% 4.3% -0.4% -0.1% 4.5% 3.8% 4.9% 3.9% More than 4.3%2.2% - 4.3%0.7% - 2.2%Less than 0.7% Source: U.S. Bureau of Economic Analysis

23. Montana Growth is Low by Western StandardsPercent Growth in Real Nonfarm Earnings, 2018 5.7% 1.5% -1.9% 2.8% 3.9% -1.6% -2.0% 3.8% 4.6% 3.5% 2.9% More than 4.3%2.2% - 4.3%0.7% - 2.2%Less than 0.7% Source: U.S. Bureau of Economic Analysis

24. Personal Income Growth Compares Better HerePercent Growth in Real Personal Income, 2018 4.7% 2.9% 2.5% 2.8% 3.3% -2.1% 2.4% 3.6% 4.2% 3.6% 2.6% More than 3.3%2.4% - 3.3%2.0% - 2.4%Less than 2.0% Source: U.S. Bureau of Economic Analysis

25. Income is Much More Than EarningsMontanaReal Personal Income, 2017 and 2018 Transfers Property Earnings

26. Transfer Income Punches Above Its WeightGrowth in Montana Real Personal Income, 2018 Transfers Property Earnings

28. Outlook for Montana’s Key Industries Tech related businesses and construction remain healthy, especially in western Montana Farm bill passage helps farmers Uncertainties for energy and natural resource producers Real estate and financial institutions set for another good year Transportation industries slowly improving Tariff and trade challenges ahead?

29. Growth in Nonfarm Earnings, Montana, 2016-22 Percent Actual Projected Source: BBER and U.S. Bureau of Economic Analysis Source: BBER and U.S. Bureau of Economic Analysis

30. Demographic Challenges and Opportunities for Montana Patrick M. Barkey, DirectorBureau of Business and Economic ResearchUniversity of Montana

31. Montana Population Tree 46 Year: 2001 Males Females

32. Montana Population Tree 56 Year: 2011 Males Females

33. Montana Population Tree 66 Year: 2021 Males Females

34. Montana is the Oldest Western StateMedian Age, 2017 37.6 39.8 35.1 39.2 35.9 36.8 37.0 37.7 30.5 36.5 36.1 More than 37.936.9 – 37.936.3 – 36.9Less than 36.3 Source: U.S. Bureau of Economic Analysis

35. Median Age, 2017

36. $49 mil $128 mil $57 mil -$20 mil Source: Internal Revenue Service

37. $254 mil $352 mil Source: Internal Revenue Service

38. -$32 mil $4 mil Source: Internal Revenue Service

39. $30 mil $62 mil Source: Internal Revenue Service

40. -$42 mil -$116 mil Source: Internal Revenue Service

41. $63 mil $113 mil Source: Internal Revenue Service

42. $97 mil Source: Internal Revenue Service $105 mil

43. $244 mil $288 mil Source: Internal Revenue Service

44. $4.9 mil -$7.8 mil Source: Internal Revenue Service

45. -$9.4 mil Source: Internal Revenue Service -$6.5 mil

46. People are Leaving Largest U.S. CitiesNet Domestic Migration, U.S., by County Size, 2011-18

47. Demographic Challenges and Opportunities Ahead Migration trends can change population projections Labor force challenges likely to persist or worsen in coming years Some solutions to labor shortages are better than others Time for thinking outside the box?